Due to the government’s numerous initiatives for economic diversification, five major areas in Algeria are predicted to grow in 2024.
Algeria is the ninth richest country in Africa with a GNI per capita of $3,660. Its GDP per capita is $3,691, and its GDP is $163,044,400,000. It is considered the gateway between Africa and Europe. Neighboring countries include Libya, Mali, Mauritania, Morocco, Niger, Tunisia, and Western Sahara. Algeria is mostly desert with a few mountains and a narrow coastal plain. The country is rich in natural resources and is an OPEC member.
Susa Africa analysts have identified mining, agriculture, renewable energy, green hydrogen, and the nation’s tourism sector as the top of the list as Algerian government continues to diversify her economy.
- Mining
The main mining centres are at Ouenza and Djebel Onk near the eastern border with Tunisia and at El-Abed in the west. Gâra Djebilet contains an estimated 3.5 billion tonnes of iron ore, of which around 1.7 billion tonnes are exploitable. The mine in the western Tindouf province was commissioned in mid-2022 with the planned initial production of between two to three million tonnes per year. In August 2023, Algeria announced her plans to pump $7-10 billion into the project to develop a giant mine with a targeted production of 40 million tonnes of iron. Algeria in December approved 140 applications by local and international companies bidding for 31 mining licences covering six sites. According to the country’s top mining authority, the new permits are for the exploration and production of several minerals, including barite, sand, yellow sand (tuff) and limestone. After meeting all legal, financial, and environmental requirements, Terramin recently achieved a significant project milestone when the mining regulator in Algeria granted the project a mining permit. Terramin wanted to mine the gold deposit for a five-year period and process the ore at Strathalbyn, in a project that could have created 140 jobs and contributed $221 million to state coffers.
- Agriculture
In Algeria, main crops, vegetables and fruits are wheat, barley, potatoes, oats, citrus fruit, grapes, dates, and figs. Palm trees cover about 72,000 hectares. Algeria also produces olive oil and tobacco. Herders in the high plateaus rear livestock, specifically goats, cattle, and sheep. Around 1.1 million people were employed in Algeria’s agricultural sector in 2019. The number decreased compared to the previous year, following a declining trend observed since 2016 onwards. Meanwhile, the Algeria agriculture market size is estimated to grow from USD 530.7 million from 2022 to 2027. The market is estimated to grow at a CAGR of 2.45% during the forecast period according to Technavio. As of 2020, agricultural activities employed around 10 percent of the total working population in Algeria. Today, hundreds of thousand hectares of land are now in economically active in the Algerian Sahara. In just a few decades, these sand dunes have given way to new vegetable gardening plots. In 2022, the government offered leases to foreign and local investors to reclaim and productively farm state-owned agricultural land in Algeria, in a bid to shift from state-sponsored agriculture towards a private sector-led agricultural model. All farmers were entitled to government aid to increase investment in farm productivity, mechanization and irrigation (which was particularly favored to overcome the sector’s reliance on rain-fed agriculture). Foreign investment was further promoted through tax exemptions for a three- to five-year period on VAT, customs, and corporate taxes. An expert noted that the infrastructure for agriculture and irrigation in Algeria is very suitable for the cultivation of wheat and barley. Algeria can be considered a second source in light of the challenges facing food supply chains because of the Russia-Ukraine crisis.
- Renewable energy
Despite the country’s reliance on hydrocarbon resources for power generation, Algeria aims to reach a renewable energy capacity of 15,000 MW and produce 27% of its electricity from renewable resources by 2035. In September 2023, Algeria opened 73 local and international bids for 15 solar power projects that will have a combined generation capacity of 2,000 megawatts (MW). To further propel the renewable energy industry, the government has implemented significant programs, including the construction of 15 photovoltaic solar power plants with a combined power capacity of 2000 MW. In addition, the government has opened its doors to welcome foreign investors.
- Green Hydrogen
A domestic production of green hydrogen would represent for Algeria an interesting opportunity to diversify its traditional markets, in line with the government’s diversification strategy. The country intends to produce 40 terawatt hours of hydrogen by 2040 as part of its national hydrogen development strategy. This will yield one million tonnes of hydrogen when converted or 10% of the demand in Europe. Algeria is becoming ready to manufacture this much and to sell it, particularly to markets in Europe.
In October 2023, German development bank KfW will provide financial support for a 50-MW pilot green hydrogen project in Algeria as part of a broader partnership between the two countries aimed at promoting the development of green energy. Official statement says the goal is to cover up to 10% of European demand for green hydrogen, similar to the H2Med pipeline project from Spain and Portugal.
- Tourism
As a very important economic sector, tourism contributes, directly or indirectly, to about 11.5% of the region’s GDP, and generates a large. After many years of neglect, Algeria’s destination has experienced renewed interest. This progress has been marked by the emergence of new products besides the traditional discovery and relaxation stays, at a time when the Algerian government is setting up a strategy for tourism development by the year 2015. According to Statista, the travel and tourism industry in Algeria contributed around 540,000 jobs in 2021. The number of jobs increased compared to the previous year when it stood at roughly 485,000. As of 2021, the tourism and travel industry accounted for five percent of the total employment in the country. The country’s close proximity to Europe and its stunning landscapes have in recent years encouraged officials in the country to attempt to gradually open up more to tourists, and develop the sector further. Since 2023, Algeria has begun issuing visas upon arrival to visitors travelling south of the country in an effort to grow its tourism industry. Authorities said the move aims to revive its tourism industry, which like other countries was severely affected by the Coronavirus disease pandemic, by reducing red tape and facilitating visitors intending to explore the country’s beauty.
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